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Cogo Group, Inc. Announces New Growth Opportunities

posted on
Sep 11, 09 06:00AM

SHENZHEN, China, Sept. 11 /PRNewswire-FirstCall/ -- Cogo Group, Inc. (Nasdaq: COGO - News) a China-based technology platform service provider of customized module design solutions and engineering and technology services to domestic and international companies, today announced a series of module design wins within multiple Smartphone and Smartbook products on both Windows Mobile and Android platforms. The Company's initial wins include blue chip Chinese handset vendors such as Huawei and ZTE, and it expects to secure contracts with other domestic China handset vendors as well. Cogo expects to begin recording small amounts of revenue from these contracts from the third quarter of 2009, with sales ramping up through the end of 2009 and into 2010.

"We expect strong market demand for digital media and cell phone solutions, driven by both domestic consumer and export business from Chinese vendors. We believe domestic handset vendors will continue to increase the number of Smartphone products aimed at both domestic and export markets," said Jeffrey Kang, CEO of Cogo. "This year we saw cell phone exports being extended from Chinese blue chip vendors, such as Huawei and ZTE, to many smaller players, who are gradually increasing their export volume and domestic market share. We serve more than 500 cell phone customers in both blue chip and SME spaces, and the proliferation of Smartphones from Chinese vendors is expected to increase Cogo's addressable market in a fast growing segment of the market. In addition, these modules typically have higher Average Selling Prices ("ASPs") than our corporate average."

"We are optimistic about our digital media and cell phone business in this quarter and in the second half of 2009, and expect this segment to grow in 2010. We have been relatively conservative in the first half of the year, as we were focusing on cash preservation and risk minimization to weather the global recession. We believe the worst is now behind us in China and we can focus on seeking new growth opportunities," said Mr. Kang.

As with the mainstream market, Cogo's current Smartphone designs are mainly based on the Windows Mobile platform. The Company expects to unveil an Android product in the fourth quarter of 2009. Since Windows Mobile and Android are broadly accepted platforms in the global market, it will help Cogo's customers expand their export business. The Company continues to experience growth in its combined digital media and handset business and has good future visibility with design wins for new features and applications including modules for motion sensors and the expected ramp-up of 3G and CMMB (China's mobile TV standard). The Company sees considerable opportunity in converged devices, which is a growth area in the Chinese mobile phone market. Overall, Cogo sees strengthening fundamentals in the China digital media and handset markets with business showing sequential seasonal improvements in the third quarter of 2009. Beginning in the third quarter of 2009, the Company will report its digital media and handset businesses as one business segment.

About CogoGroup, Inc.:

Cogo Group, Inc. (NASDAQ: COGO - News) is a leading technology platform service provider of customized module and subsystem design solutions in China. The Company believes it acts as a proxy to China's technology industry as it works with virtually all the major ODMs and OEMs in China. Cogo leverages these relationships and combines their IP to create designs that Cogo then sells to electronic manufacturers. These designs allow manufacturers to reduce their time to market for new products and ultimately increase sales. Cogo Group focuses on the mobile handset, telecommunications equipment and digital media end-markets for their customized design modules while also offering business and engineering services to their large telecommunications equipment vendor customers. Over the last twelve years, Cogo has grown its customer list to include nearly 1,300 manufacturers across the mobile handset, telecommunications equipment, industrial and consumer markets, covering both multinational Chinese subsidiaries and Chinese domestic companies.

This press release includes certain statements that are not descriptions of historical facts, but are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. These forward-looking statements may include statements about our proposed discussions related to our business or growth strategy such as growth in digital media and mobile handset, such as business with Huawei and ZTE, which are subject to change. Such information is based upon expectations of our management that were reasonable when made, but may prove to be incorrect. All such assumptions are inherently subject to uncertainties and contingencies beyond our control and upon assumptions with respect to future business decisions, which are subject to change. For further descriptions of other risks and uncertainties, see our most recent Annual Report filed with the Securities and Exchange Commission (SEC) on Form 10-K, and our subsequent SEC filings, including our most recent Forms S-1 and/or S-3. Copies of filings made with the SEC are available through the SEC's electronic data gathering analysis retrieval system (EDGAR) at www.sec.gov.